The short answer: A business broker typically sells Main Street businesses worth about $500K to $5M, carries no special license in most states unless real estate is part of the sale, and is paid a success fee of roughly 10% by the seller. An M&A advisor works the lower-middle-market, roughly $5M to $50M, and is often a FINRA-registered broker-dealer holding Series 79 and Series 63 licenses, or operates under the federal M&A Broker exemption when the target's EBITDA is under $25M or revenue is under $250M. An investment banker handles middle-market deals and up, holds Series 7 and 79 licenses, and typically runs a competitive auction. See whether you need to hire one and how the fees actually work.
Business broker: Main Street deals
A business broker is the term for someone who lists and sells small, owner-operated businesses, typically in the $500,000 to $5 million enterprise-value range. "Business broker" is not a regulated professional title. In most states, you don't need a specific license to call yourself one, unless the sale includes real estate, in which case a real estate license may be required for that part of the transaction.
Brokers are almost always hired and paid by the seller, usually a flat success-fee commission around 10% of the sale price, due at closing. As a buyer, you typically pay a listing broker nothing directly.
M&A advisor: lower-middle-market
An M&A advisor (sometimes called a business intermediary) works larger, more complex deals, roughly $5 million to $50 million in enterprise value. Because these transactions can involve securities-like considerations, many M&A advisors register with FINRA as broker-dealers and hold a Series 79 (investment banking) and Series 63 (state securities) license.
Others operate under the federal M&A Broker registration exemption, which lets a qualified advisor skip full broker-dealer registration for smaller private-company sales, specifically when the target's EBITDA is under $25 million or its revenue is under $250 million. Fee structure is usually a retainer paid during the engagement, plus a tiered or "Lehman formula" success fee that declines in percentage as deal size increases.
Why the exemption exists
Regulators created the M&A Broker exemption to reduce compliance overhead for advisors selling smaller private companies, where full broker-dealer registration was seen as disproportionate to the deal size. It doesn't apply to every transaction, conditions include deal-size caps and limits on how the advisor can be involved in financing the deal.
Investment banker: middle-market and up
Investment bankers work middle-market deals and larger. They are FINRA-licensed, typically holding a Series 7 (general securities) and Series 79 license, and they usually run a formal, competitive auction process with multiple bidders to maximize price and terms for the seller. Like M&A advisors, they're generally paid a retainer plus a success fee.
Side-by-side comparison
| Role | Typical deal size | Licensing | How paid |
|---|---|---|---|
| Business broker | ~$500K, $5M | Unregulated title; license usually only if real estate is involved | ~10% success fee, paid by seller |
| M&A advisor | ~$5M, $50M | FINRA Series 79 & 63, or the federal M&A Broker exemption (EBITDA <$25M or revenue <$250M) | Retainer + tiered/Lehman success fee |
| Investment banker | Middle-market and up | FINRA Series 7 & 79 | Retainer + success fee, via competitive auction |
Shorthand worth remembering: a broker lists Main Street deals, an advisor works the lower-middle-market, and a bank runs a middle-market auction. Deal size is the fastest way to guess which one you're talking to before you even ask about licensing.
The size of the deal decides who's selling it, broker, advisor, or banker, long before the title on their business card does.
I've sat across the table from all three, and the mistake I see buyers make most often is assuming a "broker" and an "advisor" play by the same rules. They don't, the licensing and the fee structure alone tell you which lane you're actually in, and which one to expect on a given deal size.
Not sure if you need one at all?
See the buyer's-eye breakdown of when hiring your own broker or advisor actually makes sense.
Frequently asked questions
Deal size and licensing. Business brokers typically sell Main Street businesses worth about $500K to $5M and usually need no special license unless real estate is part of the sale. M&A advisors work the lower-middle-market, roughly $5M to $50M, and are often FINRA-registered with Series 79 and 63 licenses, or operate under a federal exemption for smaller deals.
Many are. M&A advisors who handle securities-like transactions often register as FINRA broker-dealers and hold Series 79 and Series 63 licenses. Others operate under the federal M&A Broker registration exemption, which applies when the target company's EBITDA is under $25M or its revenue is under $250M.
It's a rule that lets qualified M&A brokers help sell a privately held company without registering as a full FINRA broker-dealer, as long as the target's EBITDA is under $25M or its revenue is under $250M, among other conditions. It reduces regulatory overhead for lower-middle-market deals.
Business brokers are usually paid a single success fee, often around 10% of the sale price, by the seller at closing. M&A advisors and investment bankers typically charge a retainer during the engagement plus a tiered or Lehman-formula success fee that declines as a percentage as the deal size grows.
Sources
- Business broker vs M&A advisor vs investment banker, Raincatcher (deal-size ranges and role definitions).
- M&A advisor and intermediary roles, Rejigg lower-middle-market advisor directory and guidance.
- M&A Broker registration exemption and securities licensing, FINRA (Series 7, 63, 79) and SEC M&A Broker no-action guidance.
